Transaction and abatement costs of carbon-sink projects in developing countries

Cacho, Oscar J.; Marshall, Graham R.; Milne, Mary

doi:10.1017/s1355770x05002056

Cited by 75 publications

(41 citation statements)

References 11 publications

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“…This cost includes establishment woodlots, 15 PFM units, project design documentation development, and validation to Voluntary Carbon Standards (UNIQUE 2010). While substantial, these cost estimates concur with existing literature on REDD project implementation costs (Cacho et al 2005, Antinori and Sathaye 2007, Nepstad et al 2007, WCS 2009. Resultant profits over the full 20-year REDD project lifespan were calculated in 2010 US$ using constant discount rates of 5% and 10% following Grieg-Gran (2006) and the Stern Review (Stern 2007).…”

Section: Estimating Revenues and Redd Profitssupporting

confidence: 87%

Uncertain Emission Reductions from Forest Conservation: REDD in the Bale Mountains, Ethiopia

Watson¹,

Mourato²,

Milner‐Gulland³

2013

E&S

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ABSTRACT. The environmental integrity of a mechanism rewarding Reduced Emissions from Deforestation and Degradation (REDD) depends on appropriate accounting for emission reductions. Largely stemming from a lack of forest data in developing countries, emission reductions accounting contains substantial uncertainty as a result of forest carbon stock estimates, where the application of biome-averaged data over large forest areas is commonplace. Using a case study in the Bale Mountains in Ethiopia, we exemplify the implications of primary and secondary forest carbon stock estimates on predicted REDD project emission reductions and revenues. Primary data estimate area-weighted mean forest carbon stock of 195 tC/ha ± 81, and biomeaveraged data reported by the Intergovernmental Panel on Climate Change underestimate forest carbon stock in the Bale Mountains by as much as 63% in moist forest and 58% in dry forest. Combining forest carbon stock estimates and uncertainty in voluntary carbon market prices demonstrates the financial impact of uncertainty: potential revenues over the 20-year project ranged between US$9 million and US$185 million. Estimated revenues will influence decisions to implement a project or not and may have profound implications for the level of benefit sharing that can be supported. Strong financial incentives exist to improve forest carbon stock estimates in tropical forests, as well as the environmental integrity of REDD projects.

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Section: Estimating Revenues and Redd Profitssupporting

confidence: 87%

Uncertain Emission Reductions from Forest Conservation: REDD in the Bale Mountains, Ethiopia

Watson¹,

Mourato²,

Milner‐Gulland³

2013

E&S

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“…The median flow estimate represents a more stable and long-term figure for the study site. This estimate is also in line with the opportunity costs (ranging between US$39 and US$509) reported for similar land-use types (Cacho et al 2005, Chomitz et al 2005, Börner and Wunder 2008, Bottcher et al 2009). …”

Section: Opportunity Cost Estimationsupporting

confidence: 84%

Flow and rent-based opportunity costs of water ecosystem service provision in a complex farming system

Rendón¹,

Dallimer²,

Paavola³

2016

E&S

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rent-based opportunity costs of water ecosystem service provision in a complex farming system. Ecology and Society 21 (4) ABSTRACT. Unsustainable land uses present many challenges for securing ecosystem service provision. It is also difficult to estimate the cost of a transition to more sustainable land-management practices for individual landholders. The main cost to landholders is the opportunity costs, the income foregone when changing land use for continued or enhanced ecosystem service provision. Thus accurate estimation of opportunity costs and understanding their distribution are crucial starting points for determining the economic viability and design of any payment for ecosystem services (PES) scheme. We compare two opportunity cost approaches and examine the distribution of these costs for improving drinking water quality in a complex farming system in a Honduran forest catchment. Data for both approaches was collected through a survey applied to upstream catchment landholders. Our results indicate that the direct flow approach and the proxy rent approach provide comparable and consistent opportunity cost estimates. The mean net flow return ha -1 was US$1410, but this estimate was skewed, mainly by exceptionally high coffee returns and negative returns of land uses making a loss. This estimate would imply spending over US$2 million per annum for water conservation, but a revised estimate comes to US$257,057 per annum. Opportunity costs were found to vary according to differences in land use and landholder characteristics. High value cash crops upholding the local economy, such as coffee, entail much higher opportunity costs than for example cattle grazing. These results suggest that discriminate PES payments, that vary according to opportunity costs and thus discriminate between land uses and landholders, are essential. Water quality at our case study site could be managed sustainably by a scheme focusing on highimpact land uses with lower opportunity costs and closer to water sources.

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“…One mechanism that has received a great deal of attention is a carbon-sequestration based payment (Seeberg-Elverfeldt et al 2009). However, such programs often fail because of the difficulty in monitoring and verifying compliance, and with making and enforcing contracts with, and delivering payments to, many smallholders (Lockie 2013;Alix-Garcia et al 2012;Cacho et al 2005). Research needs to shift towards generating better evidence on a wider range of specific institutional structures and mechanisms that link smallholders to financing opportunities, including expanding the innovative use of information and communication technologies (ICTs) and geo-spatial information.…”

Section: Introductionmentioning

confidence: 99%

Economics of Climate Smart Agriculture: An Overview

McCarthy

Lipper²,

Zilberman

2017

Climate Smart Agriculture

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Climate change, especially through greater frequency and intensity of climate extremes, is expected to negatively impact agriculture and food security, particularly in developing countries highly dependent on rain-fed agriculture. Promoting growth and food security must draw on the rich literature of the past 50-60 years while also addressing potential structural shifts in the factors that promote growth. This paper summarizes the economic considerations of Climate Smart Agriculture, a concept developed by the FAO to address the complex issue of how to achieve sustainable agricultural growth for food security under climate change. It addresses the lack of coherence on the CSA approach by building a formal basis of the CSA concept and methodology. We do this by posing a dynamic optimization problem wherein a social planner seeks to maximize expected discounted welfare associated with agriculture of the population they serve, both now and in the future. We analyze constraints, choices, and features of design of CSA to illustrate on the concept can be applied across a range of locations and conditions. This has implications for research, innovation, and policy design.

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Transaction and abatement costs of carbon-sink projects in developing countries

Cited by 75 publications

References 11 publications

Uncertain Emission Reductions from Forest Conservation: REDD in the Bale Mountains, Ethiopia

Uncertain Emission Reductions from Forest Conservation: REDD in the Bale Mountains, Ethiopia

Flow and rent-based opportunity costs of water ecosystem service provision in a complex farming system

Economics of Climate Smart Agriculture: An Overview

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